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Japan Times on Japan’s Ad Agencies

October 8, 2007
By Ken Worsley


Hats off to the Japan Times for publishing an excellent article today on the topic of business practices at Japan’s advertising agencies by Jochen Legewie, the president of CNC Japan K.K. We’ve noted before that Dentsu, Japan’s largest advertising firm, handles advertising for NTT DoCoMo, KDDI’s au and Softbank. In effect, the nation’s three largest mobile phone services providers are represented by the same ad agency, and issues surrounding conflict of interest have simply not been discussed.

I will quote Legewie here, but I encourage you to head on over to the Japan Times’ website and read the full piece. Better yet, buy a copy of the paper today.

Legewie laments the lack of transparency involved in the operations of Japan’s advertising firms, stating that many of their practices would be either unacceptable or even illegal in Europe. As he puts it:

Japan’s ad agencies have no legal obligation to itemize fees they charge advertisers, for example, the cost of placing an ad on the inside cover of a glossy monthly magazine or airing a 30-second TV commercial. Moreover, the agencies buy these spaces and times long in advance and sell them off as they wish, without disclosing how much it actually cost them in the first place.

The agencies then present their clients with a bill that states a single sum — and then expect no questions to be asked.

In European countries, such a practice is either discouraged or flatly outlawed.

In France, “it is prohibited for agencies to purchase advertising anywhere without an express order to do so from a client.”

Will foreign firms in Japan question the system and demand transparency? Do they have that sort of leverage? Change in this area may take time, as the practice of buying up huge amounts of ad space and them selling them off to the chosen few seems unlikely to change anytime soon.

Cheers to Legewie for writing about and promoting awareness on this issue.

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Comments

4 Responses to “Japan Times on Japan’s Ad Agencies”

  1. Contrarian on October 9th, 2007 5:30 am

    Hi Ken.

    Is online advertising not very big in Japan? I’ve never done research on the effects of online advertising on the other mediums, but one would think that with such a shady deal, clients might simply opt out of traditional lines of advertising and go for the online medium.

  2. Ken Worsley on October 9th, 2007 8:53 am

    Online advertising is big in Japan. Back in April, Dentsu published a report saying it should more than double into a “750 billion yen plus market by 2011.”

    http://www.japaneconomynews.com/2007/04/18/internet-advertising-in-japan-the-dentsu-take-on-things/

    And from a post in August: “Under strong pressure from Dentsu and Hakuhodo, some private television networks and other media firms have been reluctant to partner with Google.”

    http://www.japaneconomynews.com/2007/08/03/more-on-you-tube-google-advertising-marketing-copyright-dentsu-japan/

    Japan’s larger ad firms have been buying up small internet marketing companies very quickly, and creating sites with lots of white space to sell advertising to their clients, but they have been unable to put anything together that resembles Google’s pay-per-click advertising. They also seem very hesitant to partner with an existing player on this, though I have no idea if this might change.

  3. Joey.jp › To anyone interested in Japan’s Advertising Market on October 9th, 2007 2:30 pm

    […] Read this post and the linked articles. This was written by joey. Posted on Monday, October 8, 2007, at 10:30 pm. Filed under Japan. Bookmark the permalink. Follow comments here with the RSS feed. Post a comment or leave a trackback. […]

  4. John s on October 10th, 2007 5:05 pm

    One thing I always complain about elsewhere is how everything is line-itemed. Sounds like the foreigners don’t want to play the established game. How typical.

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